Income Protection  

One in eight would sell home in event of income loss

One in eight would sell home in event of income loss

Few people have emergency financial provisions in place and one in eight believe they would resort to selling their home in the event of income loss, according to research by Zurich.

The insurer’s cost of resilience report found 53 per cent of adults in the UK have experienced unplanned leave from work, but 92 per cent have no form of income protection cover.

In a survey of 2,059 adults in June, Zurich found a third of people do not feel financially resilient - with 26 per cent believing they would need to sell possessions to navigate an unexpected financial loss, 14 per cent would need to search for a cheaper rent option and 13 per cent would sell their home.

According to the Office for National Statistics, an estimated 131 million working days were lost as a result of sickness or injury in the UK last year and 1.36 million adults remained without work in July.

Rose St Louis, head of strategic partnerships at Zurich UK, said she finds it concerning that so many people have experienced unexpected time out of work, yet have no safety net in place for this potentially happening again.

She said: "Even more shocking is the number who would have to resort to selling their home, as this action could have a significant impact on the whole family."

Ms St Louis said a lack of savings and planning the family finances is putting millions of adults at risk of not being financially resilient.

She said: "Putting the 'it won’t happen to me' view to one side, it is vital that people review their circumstances, to see what support exists to protect their finances and lifestyle."

Zurich's report was developed alongside neuroscientist Dr Jack Lewis examining the impact of money, and the products designed to protect its loss, on feelings of resilience.

Dr Lewis said the findings demonstrate the very real impact that a period of being unable to work can have.

He said: "We have a tendency to prefer items that we can enjoy immediately over and above valuable things that we have to wait for, even when the latter adds greater value to our lives overall.

"A financial product that pays your salary when you are too ill to work is a strange and perhaps counterintuitive concept."

Dr Lewis said the industry must educate people to help them understand that products exist that ease the stress and anxiety stemming from the threat of an unanticipated loss of income.

Rob Harvey, head of protection advice at Drewberry, said his company’s own research found one in five people without income protection did not have cover because they did not know the product existed.

He said: "This opinion was particularly prominent among the youngest people (aged 18 to 24), even though when they were told about what income protection is and how it works they were willing to pay the most out of any age group to insure 50 per cent of their income each month until retirement.